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LONDON — Europe’s stock markets plunged Friday after Wall Street opened a breathtaking 7 percent lower — below the 8,000 level — but they soon recouped some of those losses when the Dow Jones index made a partial comeback.

Following the Dow’s modest retracement, the FTSE was trading 282.94 points, or 6.6 percent, lower at 4,030.86 in afternoon trading London time, while the DAX was down 401.92 points, or 8.2 percent, at 4,485.08. France’s CAC-40 was 284.43 points, or 8.3 percent, lower at 3,158.27.

In spite of the huge bailout in the U.S., Britain’s plan to buy up stakes in troubled banks, coordinated interest rate cuts around the world and massive central bank liquidity provisions, the sell-off in stock markets shows no signs of abating so long as lending rates between banks remain elevated.

That means banks are afraid to lend to each other, and raises the chance that they and other businesses won’t get the credit they need to operate.

“Irrational fear has gripped and it seems that markets will now trash almost anything that walks,” said Howard Wheeldon, senior strategist at BGC Partners.

“Last nights late Dow rout can be blamed on fears for the U.S. industrial sector. Today it is due to out and out fear.”

At the start of trading on Wall Street, the Dow briefly dipped nearly 700 points, to below the 8,000 point level, amid rising fears of the depth of a global recession before some bargain hunting helped it recoup some losses.

The Dow’s eight-day decline of nearly 25 percent is the largest since the plunge ending Oct. 26, 1987. That sell-off included Black Monday, the Oct. 19, 1987 market crash that saw the Dow fall nearly 23 percent in a single day.

Video: World markets plunge into meltdown
Smaller markets also took a beating. Trading was suspended for various times in Austria, Russia, Iceland, Romania and Ukraine while Milan suspended share dealings in nearly half of its stocks because of excessive losses.

With world stock markets indulging in one of the biggest bouts of panic selling ever, the focus of attention is firmly on G7 finance ministers as they gather in Washington later.

“What is required is some sort of assistance to money markets and unless we get thawing of the deep freeze, no one can say when the rout will be over,” said Jeremy Batstone-Carr, head of research at Charles Stanley in London.

The London Interbank Offered Rate, or Libor, for three-month borrowing in dollars has jumped another 0.07 percent to 4.82 percent, two percentage points higher than the rate just a month ago, and despite this week’s half point rate cut from the U.S. Federal Reserve and other central banks.

In Japan, the benchmark Nikkei 225 index in Japan 881.06 points, or 9.6 percent, to 8,276.43, its lowest closing level since May 2003. It was its biggest one-day percentage loss since the stock market crash of October 1987 and meant that the Nikkei lost nearly a quarter of its value during the week.

In Australia, where the S&P/ASX200 plummeted a record 8.3 percent, market watchers were calling it “Black Friday.” Key indexes in Hong Kong, Singapore, the Philippines and India were all down about 8 percent. South Korea’s Kospi closed down 4.1 percent, while the Shanghai Composite Index posted a more moderate decline of 2.8 percent.

And in Indonesia, authorities suspended trading indefinitely on the Jakarta Stock Exchange after they had halted trading Wednesday after the index plunged more than 10 percent.

It’s not just stocks that are taking a hammering. Oil prices continue to plummet and have fallen to a one-year low below $83 a barrel while the British pound has been sold heavily, falling below $1.70. The Japanese yen and gold remain in demand as safe-haven assets.